What are the requirements of foreign capital?;

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WHAT ARE THE REQUIREMENTS OF FOREIGN CAPITAL?
By RALPH M. BATEMAN
President, Confederation of British Industry
British firms have always been to the fore in foreign in-vestment in the USA. The book value of UK direct in-vestments is around S51/a billion, greater than those of any other single country, and this figure is under-stated. What does it consist of? General manufacturing now accounts for about half the total value of all foreign
direct investments in the Slates, while petroleum has dislodged insurance and other financial areas from second place. British figures mirror this trend.
An ambivalence has crept into official and Congressional attitudes toward foreign in-vestments, however. Misgiv-ings have been demonstrated by a rash of bills drafted by Ralph Rate/van Congressmen. These range
from demands that restrictions should be placed upon the foreign-owned portion of a US company's voting stock to proposals for a comprehensive government study of foreign investment in the US.
The reasons for these misgivings are undoubtedly as-sociated with the growing attractiveness of investments in the US on cost grounds and low company price-earn-ings ratios. The emergence of the Japanese as an ex-porter of capital and the possibility of major acquisitions by Middle East oil producing countries have exacerbated these feelings. US firms have felt themselves vulnerable, which added to the disquiet.
My own belief is that this disquiet marks a rather be-lated movement by the US into line with other countries concerned about the spreading influence of multinational corporations in their territories. I do not anticipate any serious general constraints. There is a basic conflict be-tween tight restrictions on foreign investment here and the need to foster the larger overseas interests of US business.
But the uncertainties do perplex (he foreign investor. Official US policy is to regard foreign direct investment as valuable and desirable, and there are virtually no laws which are designed or enforced that discriminate against foreign investment. Taken together, however, the laws and regulations which do exist—however non-discrimina-tory—form a web in which foreign businessmen can be-come so entangled as to inhibit their investing here.
By PETER A. WAHL
Paris representative, J, Henry Schroder & Co.
I think it fair to say that (he great majority of European corporations suffer serious inhibitions when it comes to investing in the US. This may seem somewhat ridiculous, yet the fact remains that the volume and diversity of the US market, the reputation American corporations now have for size, organization, and competitiveness, disturbs
many inexperienced Euro-peans, who have the sinking feeling that they would meet all sorts of problems in con-trolling their US subsidiary.
However, many foreigners believe that the US is one of the last remaining bastions of capitalism, and that in these times of commodity shortages, two commodities should never be in short supply. I refer to re-Peter Wahl sponsibility and confidence.
At the end of 1973, long-term American direct invest-ments abroad were estimated to be roughly $120 billion, and foreign direct investment in the US $17.7 billion, I think it fairly obvious that existing foreign investments in the US can hardly be considered a threat—neither due to their size, nor to any concentration in any industry.
What of the future behavior of foreign investors in the States? It is fair to say that investments will increase, steadily if not spectacularly. I can think of three reasons why Europeans are attracted to the US. First, the dollar, although not cheap, still appears undervalued. Second, the prices asked for holdings in US corporations appear reasonable now, and it is easier to obtain the informa-tion one needs. And third, European companies are fed up with the so-called stop-and-go tactics of their own authorities, which made forward planning hazardous.
Apart from a theoretical threat from the Middle East, foreign direct investment here is a positive thing. Whether starting from scratch or buying existing companies, for-eigners contribute cash and technical expertise, create employment, and reduce savings requirements. In Europe, where the American contribution was only grudgingly ac-cepted, this was of immense value. Just as American com-panies abroad are meticulous in being law-abiding and constructive members of their community, there is no reason to believe that foreigners in the US will not behave in an equally responsible manner.
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